Gabungan  AQRS  announced  that  its  30%-owned  associate,  Kreatif  Sinar Gabungan had accepted the Letter of Intent (LOI) dated 24 Nov14 for the proposed development  of Pusat Pentadbiran Sultan Ahmad Shah, Daerah Kuantan.  Among  the  terms  of  the  LOI,  the  procurement  method  for  this project will be through Sales and Purchase Agreement whereby Kreatif will be the developer and 30% of the works are to be awarded to Bumiputera contractors from Pahang. (Source: Bursa Malaysia)

Comment: This is a project which AQRS and its associate are expected to play a prominent role and significantly enhance AQRS’s construction order book. It has been reported that the Pahang state administrative center will be built over  25.3 ha at a cost of approximately RM400m. There are plans to build 9,000 units of residences, including quarters for civil servants. It has also been reported that the other shareholders of Kreatif Sinar Gabungan are Kreatif Selaras (65%) and Sinar Realiti (5%).

Until the final contract value is ascertained and awarded, we maintain our FY14E-16E forecasts, target price of RM1.77 and ADD rating for AQRS.

Source: Affin Hwang Capital Research - 10 Dec 2014